Modern merchandise can result in elevated market share, larger buyer loyalty, and diversified income streams. Most innovation efforts, nonetheless, include important threat of failure. Inserting the client on the middle of the product innovation course of is vital, however many product managers wrestle to shift their mindset from designing services to designing buyer experiences.
I’ve spent greater than 20 years researching and making use of innovation strategies to create consumer experiences that promote sustainable and significant progress. I first discovered concerning the following framework within the Innovation Dash enterprise training course supplied by Part. This adaptation, which will be utilized in virtually any business, has allowed me to take a practical method to the growth course of. By making use of this product innovation technique, you may be well-positioned to:
- Uncover latent alternatives for your corporation inside your goal market.
- Reframe buyer issues to design the suitable resolution.
- Higher perceive your prospects.
- De-risk and prioritize innovation concepts.
Figuring out Product Growth Danger
You could be conversant in the Ansoff matrix, a grid-style planning software that plots out the kinds of progress that come up from new and current product growth and enlargement into new and current markets.
I additionally discover the matrix useful for visualizing innovation methods and evaluating threat stage. Right here’s what every quadrant represents:
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Market Penetration = Low Danger
Enhance by optimizing an current product for an current market. -
Product Growth = Medium Danger
Improve by providing a brand new product to an current market. -
Market Growth = Medium Danger
Develop by launching an current product in a brand new market. -
Diversification = Excessive Danger
Diversify by creating a brand new product for a brand new market.
The Product Innovation Framework in Motion
After getting reviewed the potential progress paths along with your staff, use this four-stage framework to information your product innovation course of:
- Perceive buyer issues.
- Design an answer.
- Prioritize new concepts.
- Experiment and check.
These steps will enable you to and your staff establish new alternatives and create new experiences whereas avoiding the pitfalls that may lead innovation initiatives astray. To see the framework in motion, we’re going to look at how fictitious airline firm InnovateAir may leverage it to drive innovation as a part of a progress technique.
Perceive Buyer Issues
InnovateAir’s product managers started by segmenting the market based mostly on traveler varieties: leisure vs. enterprise. A sound segmentation technique should seize key variations in buyer habits and wishes.
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Leisure Traveler |
Enterprise Traveler |
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InnovateAir’s product managers decided that enterprise vacationers are keen to pay extra as a result of they’re typically time-pressed (and utilizing the corporate bank card)—so this section has the very best potential for progress. Additional market analysis signifies that enterprise vacationers are most involved about flight delays, incomes loyalty factors, seat availability, ease of journey to and from the airport, and the pace of airport safety.
Curiosity is a product supervisor’s greatest ally: It is very important attain out and speak to as many potential prospects as potential to grasp their views, what they’re making an attempt to realize, and the obstacles they wish to overcome. InnovateAir’s product managers performed a number of interviews with enterprise vacationers and recognized the completely different jobs-to-be-done (JTBD) utilizing a internet of abstraction method. They then analyzed the first JTBD, which is flying from Metropolis A to Metropolis B.
By delving deeper and asking “Why,” product managers can perceive the practical, social, and emotional outcomes of the consumer expertise. This train pinpointed three fundamental the explanation why enterprise vacationers need to fly: Flying is environment friendly, protected, and often nice. It discovered the 4 fundamental obstacles for enterprise vacationers to be value, stress, lack of productiveness, and flight delays or cancellations.
Based mostly on this train, InnovateAir’s product managers can hypothesize that the first JBTD for a enterprise traveler is to fly from Metropolis A to Metropolis B in probably the most hassle-free, environment friendly, and productive method potential.
Design a Answer
Step one in designing an answer is to grasp how your present providing matches within the general consumer journey. Typically, your services or products is just half of the general consumer expertise. For InnovateAir, the traveler’s journey contains the flying expertise in addition to related actions comparable to reserving, attending to the airport, and clearing airport safety. Audit your buyer’s wider journey to seek out gaps that present alternatives for innovation that notice clear advantages.
For InnovateAir, the journey audit recognized that completely different suppliers serve the consumer throughout their journey however there’s restricted information-sharing amongst them, so alternative exists to combine floor and flight transportation extra intently. This could provide the client a extra seamless end-to-end journey expertise that may optimize productiveness and cut back stress.
Carry out a competency audit to take inventory of your group’s capabilities and belongings. Consider methods you’ll be able to repurpose these to develop new options or experiences. That is what it appeared like for InnovateAir:
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Stock |
Innovation |
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this by way of the Ansoff matrix lens, these concepts every fall into a special quadrant. Trip-share app integration could be market penetration (low threat); the Loyalty community could be product growth (medium threat); curated journey packages could be diversification (excessive threat).
Prioritize New Concepts
Prioritize the expansion alternatives by performing an evaluation utilizing the RIME (attain, influence, monetization, and energy) framework. For InnovateAir, all three concepts have broad attain and influence when it comes to the buyer worth proposition. The variations are within the monetization potential and the hassle required.
A buyer loyalty community might be a terrific characteristic, however implementing a social media platform could be difficult as a result of knowledge privateness laws and the engineering experience wanted. Curated journey packages are additionally a compelling thought, and the switching prices to assemble InnovateAir-recommended packages on aggregator websites comparable to Expedia or Hotwire are low; nonetheless, vacationers would then have alternatives to seek out even decrease costs for a similar packages on aggregator websites, and this might dilute the income potential and influence general monetization.
The very best thought seems to be ride-share app integration, as a result of its broad attain, influence, capability to monetize, and the average effort and price required to develop and launch. Additionally it is the bottom threat. That is the expertise that InnovateAir’s product managers determined to prioritize and check first.
InnovateAir’s product managers analyzed the assumptions and proof for this expertise utilizing the RIME framework:
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RIME |
Key Assumptions and Sizing |
|---|---|
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Attain |
InnovateAir enterprise vacationers: 16.8 million per 12 months |
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Affect |
Higher enterprise traveler satisfaction with a extra optimized end-to-end expertise |
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Monetization |
Common value per journey: $62 |
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Effort |
Price = growth prices + advertising and marketing prices + partnership allowance prices |
Utilizing the outcomes, InnovateAir product managers developed a speculation that when integrating ride-share apps with dwell airport data through the app, prospects could be keen to pay an additional 5%, with a present common spend of round $62 per trip. The product managers thought-about this to be an inexpensive assumption that might be examined by working with ride-sharing corporations and conducting an A/B check in a goal market. The elevated spend per trip was a pretty proposition that might be shared between InnovateAir and the respective ride-sharing corporations. The general income alternative based mostly on the present penetration of airport ride-share journeys made by InnovateAir’s enterprise vacationers translated right into a wholesome approximation of $1.5 billion over 5 years.
Experiment and Check
An amazing software for de-risking innovation is testing. Product groups can run easy, low-cost experiments to check their hypotheses with clear and goal standards.
The InnovateAir product staff designed a check concentrating on InnovateAir Loyalty enterprise vacationers within the US with an intra-state vacation spot to see if they’d e book their airport ride-shares utilizing the InnovateAir app fairly than Uber or Lyft. They created the power to e book a ride-share on the level of check-in for departing and arriving flights, and built-in this with dwell flight, airport, and visitors data. A profitable final result could be 25% of vacationers utilizing the characteristic, and greater than 50% utilizing it for all their floor transportation wants.
Give attention to the Buyer Expertise
To unlock new progress alternatives, at the moment’s most modern corporations don’t focus completely on the merchandise they promote, however fairly on the client expertise. By following the product innovation framework laid out right here, your product staff can establish a solution to deal with key ache factors in your current market that can drive extra income, bettering your general choices. Leveraging this framework mitigates the chance concerned with modern product growth, guaranteeing new merchandise are aligned with enterprise wants and capabilities and have sturdy ROI potential, all whereas providing a brand new, worthwhile buyer expertise.
Notice: Any references to Uber and Lyft are made purely within the context of this fictitious case examine as an instance a degree. The writer has no information of any such industrial initiatives on the a part of these ride-sharing corporations.
